Legal Framework Of Minimum Wages In Turkey Economics Essay

A minimal pay is the lowest hourly, day-to-day or monthly pay that employers may lawfully pay to employees or workers. Minimum pay jurisprudence was foremost enacted in Australia and New Zealand in the late 19th century. Today, these Torahs are now in force in more than 90 % of all states and Turkey is one of them.

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Legal model of minimal rewards in Turkey dates back to 1967 and has been complemented nationally in 1974. In conformity with Article 39 of the Labor Code, Turkey ‘s lower limit pay is applied at the national degree and is set by the Minimum Wage Fixing Committee. The jurisprudence denotes that lower limit rewards have to be revised at least every two old ages by a commission coverage to the Ministry of Labor and Social Security ( Bulutay T. , 1995 ) . The Minimum Wage Fixing ( MWF ) Committee consists of the representatives from Government, from employer associations, and a selected employee commissary [ 6 ] . The commissary is elected by the Turkish Confederation of Trade Unions ( Turk-A°AY ) .

Due to high rising prices rates the lower limit pay has started to be adjusted every twelvemonth in 1988 and twice a twelvemonth after 1999. Despite the frequent accommodations and high rises which are up to 107 % annually in 1996, the existent lower limit pay has fluctuated over the old ages on history of high rising prices rates which Turkish economic system had between 1980 and 2002. The gross monthly lower limit pay expressed in US Dollar increased well during 1989-93 period, dropped sharply to 1989 degrees in 1994, easy recovered during the 2nd half of the 90 ‘s and peaked in 1999 and dropped boulder clay 2000. Between 2000- 2002 the minimal rewards stayed steady. After 2002 it begun to increase ( Bulutay T. , 1995 ) .

The MWF Committee normally starts working in November of every twelvemonth to put the rise in following twelvemonth and the rise which will be implemented in the center of following twelvemonth. With the start of commission to work, capable take much topographic point in the media and the society focuses on it as it affects many people ‘s economic status. Intense treatments and withdraws from meetings by employee commissary has became a usual portion of this work in old ages. After the understanding of three sides, largely, some trade brotherhoods do non accept the sums and work stoppage or travel for mass meetings. They besides question the capacity of representation of workers by alliance of trade brotherhoods and demand for a higher degree of representation. In recent old ages, commissary has been the topic of unfavorable judgment from workers and labour advocators who believe that the minimal pay is excessively low and claim that workers ‘ involvements are non adequately represented on the commissary.

Public sentiment about the minimal pay is besides against the specified sums. Most people believe that the minimal rewards are really low for life in Turkey. Turk-A°AY studies besides reveal this point. Harmonizing to the study, poverty bound for a four individual household is 2.375 YTL ( Turkish New Lira ) whereas the net lower limit pay is 497 YTL. It is besides estimated that more than 28 % of Turkey ‘s population is populating below the poorness line.

Contrary, some members of the concern community fear that Turkey ‘s lifting lower limit pay has the possible to do Turkey uncompetitive among neighbouring states where rewards are lower. Turkey has one of the highest minimal pay degrees in east European states and this is decelerating employment growing ( Schwobel, C. , n.d. ) . Some even call for lessenings in the legal lower limit pay in order to increase employment ( Lally A. , 2005 ) . Unemployment remains to be a serious economic and societal job for the state as it keeps increasing despite the high growing rates achieved in the recent old ages. Harmonizing to Turkey ‘s State Institute of Statistics, in June 2005, Turkey ‘s unemployment rate was estimated at 10.9 % between February and April. The “ Household Labor Force Survey ” conducted by the Institute showed that the unemployment rate is 13.3 % in urban countries and 7,5 % in rural countries. Entire unemployment in Turkey is estimated at 2,1 million, with an employment rate of 47,1 % .

The remarks of concern people merely depend on the market uncluttering theoretical account ‘s regulation. They assert that lower limit pay is set in a degree more than market glade pay value, ensuing workers work for a pay, which is more than they should derive and this leads to unemployment as seen in the figure.

Figure: The Competitive Labor Market

Puting minimal pay at a higher value than the economic system can afford besides boosts the informal economic system.

The minimal day-to-day rewards are given below,

Minimal Wage released day of the months

Daily Minimum Wage

YTL/day

01.07.1974A -A 31.05.1976

0,00004

01.06.1976A -A 31.12.1977

0,00006

01.01.1978A -A 30.04.1979

0,00011

01.05.1979A -A 30.04.1981

0,00018

01.05.1981A -A 31.12.1982

0,000333

01.01.1983A -A 31.03.1984

0,00054

01.04.1984A -A 30.09.1985

0,000818

01.10.1985A -A 30.06.1987

0,00138

01.07.1987A -A 30.06.1988

0,002475

01.07.1988A -A 31.07.1989

0,0042

01.08.1989A -A 31.07.1990A

0,0075

01.08.1990A -A 31.07.1991

0,0138

01.08.1991A -A 31.07.1992

0,0267

01.08.1992A -A 31.07.1993

0,0483

01.08.1993A -A 31.08.1994

0,08325

01.09.1994A -A 31.08.1995

0,139125

01.09.1995A -A 31.07.1996

0,282

01.08.1996A -A 31.07.1997

0,567

01.08.1997A -A 31.07.1998

1,18125

01.08.1998A -A 31.12.1998

1,59465

01.01.1999A -A 30.06.1999

2,6025

01.07.1999A -A 31.12.1999

3,12

01.01.2000A -A 30.06.2000

3,66

01.07.2000A -A 31.12.2000

3,96

01.01.2001A -A 30.06.2001

4,665

01.07.2001A -A 31.07.2001

4,89825

01.08.2001A -A 31.12.2001

5,598

01.01.2002 – 30.06.2002

7,400025

01.07.2002 – 31.12.2002

8,3625

01.01.2003 – 31.12.2003

10,2

01.01.2004-30.06.2004A

14,1

01.07.2004-31.12.2004A

14,805

01.01.2005-31.12.2005A

16,29

01.01.2006-31.12.2006

17,7

01.01.2007-30.06.2007

18,75

01.07.2007-31.12.2007

19,5

01.01.2008-30.06.2008

20,28

01.07.2008-31.12.2008

21,29

01.01.2009-30.06.2009

22,2

01.07.2009-31.12.2009

23,1

In the theoretical account, the day-to-day lower limit pay will be analyzed sing to age group and rural/urban proportion of it. By this manner the possible worker group will be investigated.

Population prognosis in Turkey sing to approaching old ages are given below. It is calculated by geometric addition method by utilizing the expression as follows,

Kilograms: geometric addition coefficient

P1: initial population

Platinum: concluding population in twelvemonth N

t1: initial clip

Tennessee: concluding clip

Old ages

Population

Old ages

Population

2005

72844036

2029

102775595

2006

73896352

2030

104260307

2007

74963870

2031

105766468

2008

76046810

2032

107294386

2009

77145394

2033

108844378

2010

78259848

2034

110416760

2011

79390402

2035

112011858

2012

80537288

2036

113629998

2013

81700742

2037

115271515

2014

82881003

2038

116936745

2015

84078315

2039

118626031

2016

85292923

2040

120339721

2017

86525078

2041

122078167

2018

87775033

2042

123841727

2019

89043044

2043

125630764

2020

90329374

2044

127445645

2021

91634286

2045

129286745

2022

92958049

2046

131154441

2023

94300935

2047

133049118

2024

95663221

2048

134971166

2025

97045187

2049

136920980

2026

98447116

2050

138898962

2027

99869299

2028

101312026

At the terminal a expression is found which is base on twelvemonth 2005. This expression which will be used through besides in upcoming computations such as urban/rural population proportion, possible workers and unemployment is given below ;

Thymine

Platinum

Rural proportion

Rural population

Potential Workers

Labor Supply

2005

72844036

0,35

25495413

17846789

2006

73896352

0,35

25863723

18104606

2007

74963870

0,35

26237355

18366148

2008

76046810

0,35

26616383

18631468

2009

77145394

0,35

27000888

18900621

2010

78259848

0,35

27390947

19173663

2011

79390402

0,35

27786641

19450648

2012

80537288

0,35

28188051

19731636

2013

81700742

0,35

28595260

20016682

2014

82881003

0,35

29008351

20305846

2015

84078315

0,35

29427410

20599187

2016

85292923

0,35

29852523

20896766

2017

86525078

0,35

30283777

21198644

2018

87775033

0,35

30721261

21504883

2019

89043044

0,35

31165066

21815546

2020

90329374

0,35

31615281

22130697

2021

91634286

0,35

32072000

22450400

2022

92958049

0,35

32535317

22774722

2023

94300935

0,35

33005327

23103729

2024

95663221

0,35

33482127

23437489

2025

97045187

0,35

33965815

23776071

2026

98447116

0,35

34456491

24119544

2027

99869299

0,35

34954255

24467978

2028

101312026

0,35

35459209

24821446

2029

102775595

0,35

35971458

25180021

2030

104260307

0,35

36491108

25543775

2031

105766468

0,35

37018264

25912785

2032

107294386

0,35

37553035

26287125

2033

108844378

0,35

38095532

26666872

2034

110416760

0,35

38645866

27052106

2035

112011858

0,35

39204150

27442905

2036

113629998

0,35

39770499

27839350

2037

115271515

0,35

40345030

28241521

2038

116936745

0,35

40927861

28649502

2039

118626031

0,35

41519111

29063378

2040

120339721

0,35

42118902

29483232

2041

122078167

0,35

42727358

29909151

2042

123841727

0,35

43344604

30341223

2043

125630764

0,35

43970767

30779537

2044

127445645

0,35

44605976

31224183

2045

129286745

0,35

45250361

31675252

2046

131154441

0,35

45904054

32132838

2047

133049118

0,35

46567191

32597034

2048

134971166

0,35

47239908

33067936

2049

136920980

0,35

47922343

33545640

2050

138898962

0,35

48614637

34030246

2051

140905518

0,35

49316931

34521852

2052

142941061

0,35

50029371

35020560

2053

145006009

0,35

50752103

35526472

2054

147100788

0,35

51485276

36039693

2055

149225829

0,35

52229040

36560328

2056

151381568

0,35

52983549

37088484

2057

153568450

0,35

53748957

37624270

2058

155786923

0,35

54525423

38167796

2059

158037445

0,35

55313106

38719174

2060

160320478

0,35

56112167

39278517

2061

162636493

0,35

56922772

39845941

2062

164985965

0,35

57745088

40421561

2063

167369377

0,35

58579282

41005497

2064

169787221

0,35

59425527

41597869

2065

172239993

0,35

60283998

42198798

2066

174728199

0,35

61154870

42808409

2067

177252349

0,35

62038322

43426826

2068

179812964

0,35

62934537

44054176

2069

182410570

0,35

63843699

44690590

2070

185045701

0,35

64765995

45336197

2071

187718900

0,35

65701615

45991130

2072

190430716

0,35

66650751

46655525

2073

193181707

0,35

67613598

47329518

2074

195972440

0,35

68590354

48013248

2075

198803488

0,35

69581221

48706855

Potential workers are considered 70 % of the rural population. Such a immense per centum has been taken because it was necessary to take into history a little sum of urban population as workers, by taking rural populations ‘ 70 % the work will be carried on in assurance interval. The workers age group is taken as in the scope of 25-55 old ages. The possible workers ‘ sum is equal to the labour supply in whole state. This labour force spreads into different subdivisions such as building workers, fabricating workers, industrial workers etc. At this point ; the relevant portion is to cipher building workers. But to specify minimal pay, the labour which is demanded by the state should be found. To make this, we the unemployment rate shall be analyzed and extracted from labour supply. By this manner to the sum of demanded workers which will steer us to happen minimal pay we can be reached.

The old unemployment rate which has been released by the universe fact book are given below on the tabular array,

Old ages

Unemployment

rate ( % )

2003

10,8

2004

10,5

2005

9,3

2006

10,2

2007

10,2

2008

9,9

2009

10,7

For upcoming old ages ‘ unemployment rate, the norm of these values will be considered. In this instance it can be defined as 10.228. The labour demand is as follows ;

Old ages

Potential Workers

Labor demand= Labor Supply* ( 1-U )

Unemployment

2005

17846789

16021419

1825370

2006

18104606

16252867

1851739

2007

18366148

16487659

1878490

2008

18631468

16725842

1905627

2009

18900621

16967466

1933156

2010

19173663

17212581

1961082

2011

19450648

17461236

1989412

2012

19731636

17713484

2018152

2013

20016682

17969376

2047306

2014

20305846

18228964

2076882

2015

20599187

18492302

2106885

2016

20896766

18759445

2137321

2017

21198644

19030447

2168197

2018

21504883

19305364

2199519

2019

21815546

19584252

2231294

2020

22130697

19867169

2263528

2021

22450400

20154173

2296227

2022

22774722

20445323

2329399

2023

23103729

20740680

2363049

2024

23437489

21040303

2397186

2025

23776071

21344254

2431817

2026

24119544

21652597

2466947

2027

24467978

21965393

2502585

2028

24821446

22282709

2538738

2029

25180021

22604608

2575413

2030

25543775

22931158

2612617

2031

25912785

23262425

2650360

2032

26287125

23598478

2688647

2033

26666872

23939385

2727488

2034

27052106

24285217

2766889

2035

27442905

24636045

2806860

2036

27839350

24991941

2847409

2037

28241521

25352978

2888543

2038

28649502

25719231

2930271

2039

29063378

26090775

2972602

2040

29483232

26467687

3015545

2041

29909151

26850043

3059108

2042

30341223

27237923

3103300

2043

30779537

27631406

3148131

2044

31224183

28030574

3193609

2045

31675252

28435508

3239745

2046

32132838

28846291

3286547

2047

32597034

29263009

3334025

2048

33067936

29685747

3382188

2049

33545640

30114592

3431048

2050

34030246

30549632

3480614

2051

34521852

30990957

3530895

2052

35020560

31438657

3581903

2053

35526472

31892825

3633648

2054

36039693

32353553

3686140

2055

36560328

32820938

3739390

2056

37088484

33295074

3793410

2057

37624270

33776060

3848210

2058

38167796

34263994

3903802

2059

38719174

34758977

3960197

2060

39278517

35261110

4017407

2061

39845941

35770498

4075443

2062

40421561

36287244

4134317

2063

41005497

36811455

4194042

2064

41597869

37343239

4254630

2065

42198798

37882705

4316093

2066

42808409

38429965

4378444

2067

43426826

38985130

4441696

2068

44054176

39548315

4505861

2069

44690590

40119636

4570954

2070

45336197

40699211

4636986

2071

45991130

41287158

4703973

2072

46655525

41883598

4771927

2073

47329518

42488655

4840863

2074

48013248

43102453

4910795

2075

48706855

43725117

4981737

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